Bangladesh Bank is contemplating a repo rate hike of 25 to 50 basis points in its upcoming monetary policy, aiming to curb persistent inflation. A senior central bank official, speaking anonymously, disclosed plans to potentially raise the policy rate to a maximum of 8.25%, up from the current 7.75%.
The central bank’s move, set to be announced for the second half of FY24, aims to address inflation and stabilize the exchange rate. The draft policy, approved at a recent board meeting, suggests a departure from real market-based exchange rates due to foreign exchange market instability.
The crawling peg system will be employed to regulate currency movement and ensure stability. The monetary policy committee, featuring prominent economists, will emphasize controlling escalating inflation over the past eight months. Concerns arise over the effectiveness of the crawling peg system in an economy heavily reliant on remittances for USD, prompting the need for increased export earnings.
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